Travel cover is a must, even for a 'staycation'

Holidaying in the UK can save money, but be careful not to scrimp on insurance

The 12 million Britons hoping to cut costs by holidaying at home this summer could find themselves out of pocket if they haven't taken out the right travel cover, insurers warned last week.

With the economy still lagging and the pound struggling, many of us are sacrificing a holiday overseas, to save money. But those opting for a "staycation" face the same risks as they would abroad. A domestic flight, say, can be as easily cancelled or delayed as an international flight, and UK holidaymakers are similarly vulnerable to theft or damage to belongings.

"Many Brits may not even consider taking out travel insurance. However, it may be worth considering, especially if they are flying within the UK or taking expensive possessions with them," says Maxine Baker, the manager of travel insurance at Moneysupermarket.com.

Two in five Britons say they are taking their main holiday in the UK this year because of financial concerns, according to insurers Liverpool Victoria. "It's not surprising that holidaymakers are thinking twice about spending their hard-earned wages on expensive overseas holidays. However, UK holidaymakers should remember that travel insurance is still important," says John O'Roarke, the managing director of LV's travel insurance.

According to claims data from insurer AXA, cancellation, baggage and curtailment (cutting a holiday short) are the most common claims made on domestic holidays. Cancellation accounts for half of all AXA's claims, with the average amount claimed being £396. Damage to baggage is next in line with claims averaging at £183, while curtailment claims come in at £339.

But there could be other issues. Anyone travelling to the Channel Islands, for example, will not be covered for medical treatment by their European Heath Insurance Card (EHIC) or the NHS, so falling ill could be costly without medical cover. There could also be the cost of getting home. AXA warns that while medical treatment will be covered by the NHS in the UK, actually getting home will come out of your own pocket if you haven't declared medical conditions to your insurer.

Those taking a caravanning break should ensure they get proper caravan cover as well as car insurance and travel cover, advises Alison Patrick, the head of travel at AXA. "Travel policies will not cover you for damage or theft of the caravan, but will cover you for possessions in the vehicle," she says.

There is also the worry that your holiday firm, like 50 others in the past 12 months, will go bust, according to AA Travel Insurance. Package holidays should be covered by Atol, but the many holidaymakers who prefer to book flights and hotels separately are vulnerable without comprehensive cover. To compensate for the increased danger, AA's travel insurance automatically includes protection against the insolvency of any travel or accommodation supplier, up to £5,000 per person.

"Many travellers believe they are fully protected through their insurance, credit card or travel compensation schemes. But cover is often incomplete and patchy," says Christian Young, the chief executive of AA Travel Insurance.

Despite the pitfalls, almost half of those questioned in a recent survey by comparison site Moneysupermarket.com revealed they would not insure themselves for a holiday in Britain. But insurance for UK breaks is, in the main, reasonably priced. A single-trip policy with OUL Direct costs just £10.29 for a family of four for one week and includes £1,500 cover for baggage, £3,000 for cancellation and £5m for medical expenses. Annual policies can be taken out for around £30, again for a family of four, which will usually work out cheaper if you plan to make more than two trips per year. TopDog offers its Emerald Annual Multi-Trip policy for £32.80 and covers for loss of baggage up to £1,000, cancellation of holiday up to £750 and medical expenses up to £10m.

There are several ways to reduce costs on travel insurance for home and abroad. First, check existing annual policies, as many include UK cover. Conditions vary, so check the fine print for inclusions and exclusions. Campers, say, might have to inform their insurers in advance as their policies will need to reflect the increased risk to possessions. It may be worth taking out specialist insurance. E&L offers standalone cover from £16 per year and covers camping equipment valued up to £10,000.

Holidaymakers should also check their home insurance policies as they may cover belongings outside the home, and premium current account holders who pay a monthly fee may find they have travel insurance as a benefit. Again, check the terms. When buying a policy, it is almost always cheaper to buy directly from the insurer rather than from a tour operator or travel agent.

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